Exploration Company Updates Project With 373% More Indicated Silver

On December 15, 2023, Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) announced in a press release that it had filed a technical report for its La Guitarra silver-gold project. The project, located in Temascaltepec, Mexico, returned encouraging results, including an increase of 373% in its indicated silver equivalent (AgEq) to 27.2 million ounces and an increase of 204% in its inferred (AgEq) resource to 20.2 million ounces.

According to the company's report, the La Guitarra project contains an indicated 3,842,000 tonnes of silver resources and an inferred 4,105,000 tonnes of silver resource.

The report went into further detail, stating that the La Guitarra project contained the company's largest resource but that Mina De Agua contained the second largest, with an indicated silver resource of 761,000 tonnes and an inferred resource of 545,000 tonnes. According to the company, its projects contain inferred tailings totaling 2,073,000 tonnes of silver resource.

Silver Looking at "Explosive" Price Rise

Chen Lin examined the silver market on December 12, 2023, and concluded that the deficit in silver is likely to continue. Lin cited solar panels as a major driver of demand for silver: "Solar panel innovation, meanwhile, has reached an inflection point. In order to increase efficiency, 25-150% more silver is needed for the future generation of solar panels."

Beacon Securities Analyst Bereket Berhe rated the company as a Speculative Buy with a target price of CA$0.75. 

According to Lin, the demand for silver is likely to outstrip supply in the future.

John Newell of Golden Sky Minerals predicted that "silver prices could experience an ‘explosive' rise in 2024 if global supplies continue to fall short of demand."

According to Newell, this rise in silver prices could be brought on by rate cuts on the part of the U.S. Federal Reserve in 2024, which traditionally drives investors towards "safe haven" investments like precious metals, and demand for silver in solar panels.

Strong Speculative Buy

Technical Analyst Clive Maund reviewed the company on July 25, 2023, and rated the company as a "Strong Speculative Buy" for potential investors, and cited several factors, including the company's encouraging grades from the La Tigra project, in his assessment of the company.

Maund also commented on the company's stock position, "After starting trading early in June, the stock has been in a gentle converging downtrend which is a bullish Falling Wedge. The volume pattern has been bullish throughout, which is why the Accumulation line has been trending strongly higher." Maund continued that the stock should have "the wind at its back" as the Downside finishes up.

Beacon Securities Analyst Bereket Berhe also looked at Sierra Madre on November 9, 2023, and rated the company as a Speculative Buy with a target price of CA$0.75. Berhe referenced the expansion of La Guitarra's resource by 275%, along with the expectation that the company will resume commercial production within the next two years, in his positive rating.

VSA Capital also mentioned the resource updated in its November 13 note on Sierra Madre. The report rated Sierra Madre as a Buy for potential investors with a target price of CA$0.90.

VSA Capital also mentioned the resource updated in its November 13 note on Sierra Madre. The report rated Sierra Madre as a Buy for potential investors with a target price of CA$0.90.

"The resource upgrade means that the stock is now trading on an EV/oz of US$1.1/oz which is a discount off c70% to the peer group. This despite the nearterm restart potential underpinned by full permitting and an experienced management team with in-depth knowledge of the asset. Furthermore, we expect the restart plan to confirm modest capital costs to achieve the current nameplate capacity of 520tpd in a phased manner. However, this scale of production is a starting point to unlock the wider potential of the c40,000ha license area," the report stated. 

Sierra Madre has a number of catalysts to report, according to its investor presentation: the company is expecting a mine restart study and mill upgrades in Q1 and Q4 of 2024 and has slated commercial production to begin in 2025.

Ownership and Share Structure

According to the company, management and insiders own approximately 21.1% of the company.

Reuters reports that President and CEO Alexander Langer owns 2.01% of the company with 2.99 million shares, Executive Chairman and COO Gregory K. Liller owns 1.83% of the company with 2.72 million shares, Lead Director Jorge Ramiro Monroy owns 1.36% of the company with 2.02 million shares, Director and Country Manager Alejandro Caraveo owns 1.19% of the company with 1.77 million shares, Corporate Secretary Kerry Melbourne Spong owns 0.44% of the company with 0.66 million shares, and Director Gregory F. Smith owns 0.17% of the company with 0.25 million shares.

Institutions own 11.1% of the company. Commodity Capital AG has 1.31%, with 1.95 million shares. 

47.7% is with strategic investor First Majestic Silver Corp., which owns 69.06 million shares.

The rest is with retail.

According to Reuters, there are 149.12 million shares outstanding with 69.63 million free float traded shares, while the company has a market cap of CA$52.98 million and trades in the 52-week period between CA$0.30 and CA$0.51.

Important Disclosures:

1. Sierra Madre Gold and Silver Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver Ltd.
3. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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